Foreword

This inquiry was held at a crossroads in Australia’s industrial and economic development.

Inquiry participants told the Committee that Australia has a once-in-a-generation opportunity to revive a world-class competitive manufacturing sector by fully embracing the advantages of advanced manufacturing.

Technologies and processes associated with the Fourth Industrial Revolution (Industry 4.0), such as artificial intelligence, robotics and 3D printing, have potential to transform Australian manufacturing. New technologies can supercharge our existing competitive advantages in high value-added niches in export markets. Developing advanced manufacturing will diversify our exports, improve Australia’s resilience to trade shocks and deliver high-quality jobs.

Manufacturing has declined in Australia over the past fifty years. In the 1960s, manufacturing represented approximately 30 per cent of both Australia’s gross domestic product (GDP) and employment. It is now 5.2 per cent of GDP and 6.5 per cent of employment. Australia can and must reverse this decline to secure our domestic capability and to become a globally competitive exporter.

In recent years, COVID-19 and geopolitical trade shocks showed the vulnerabilities of a reduced manufacturing base. There is now broad support for the goal of achieving sovereign capability in areas critical to the functioning of Australian society. Australia can also expand its role in global value chains for sensitive or high value-added products that rely on quality, safety and trust.

The Australian Government has a key role to play facilitating the transition to advanced manufacturing. This report makes 10 recommendations to build on the existing program of work by the Australian Government.

Many of the recommendations are aimed at better supporting small- and medium-sized manufacturers. Small-to-medium enterprises (SMEs) make up the majority of Australian manufacturers. Their ability to adopt Industry 4.0 technologies can be hampered by lack of investment capital.

The Australian Government can help address this barrier by leaning into its ‘Buy Australian’ procurement policy and by ensuring funding programs are easily navigable by SMEs. This will bring ‘bang for the buck’ in government procurement, and lead to increased levels of private investment.

The Committee heard broad support for the National Reconstruction Fund (NRF) priority areas, but also warnings that the NRF should not enforce silos that restrict funding of genuinely cross-cutting capabilities.

The Australian Government should also build on existing mechanisms for collaboration between manufacturers and the research sector, including the CSIRO. Establishing advanced manufacturing common user facilities in strategic locations would lower the costs and risks faced by manufacturers seeking to innovate or to apply Industry 4.0 technologies, particularly SMEs. Such organisations and facilities can become the anchors of broader collaborative ecosystems, where links between local industries, government and education and training institutions can help to ‘lift all boats’.

Many witnesses stressed the problems caused by worker and skills shortages. The Committee has suggested a multi-pronged approach, including changes to the skilled migration system to better enable certain specialist workers to come to Australia, scaling up existing development programs for manufacturing SMEs and measures to attract and retain a more diverse advanced manufacturing workforce.

Developing advanced manufacturing needs a continuing bipartisan strategic commitment, so investors can be confident investing in local manufacturers for the long haul.

But the result will be worth it. Getting this right means high-quality jobs for a new generation of skilled tradespeople and university graduates. It means more world-competitive businesses exporting Australian know-how to the world. It means a more diverse and resilient export basket. And it means strong sovereign capabilities, to keep our society and economy thriving through any future challenges.

Mr Rob Mitchell MP

Chair